If you are a merchant on Amazon, there are a couple of things you need to do to ensure your products sells. That's pretty obvious.
And another thing you need to do? Get your armor ready as you sit and wait for dragons to threaten your sales.
The dragons here stand for the huge, yet “hush-hush” problem that Amazon is quickly becoming known for: the Chinese counterfeiting problem.
According to CNBC, sellers say the problem seems to have exploded this year after Amazon opened their doors to Chinese manufacturers who previously had to make use of middlemen, brands and private labels to reach global consumers.
Critics of Amazon say what was once a ground-breaking marketplace has now turned into a “chaotic lawless bazaar”.
“Amazon is making money hand over fist from counterfeiters, and they've done about as little as possible for as long as possible to address the issue,” said Chris Johnson, an attorney at Johnson & Pham LLP, which focuses on intellectual property and brand enforcement and represents clients including Forever 21, Adobe and OtterBox. “Word is out in the counterfeit community that it's open season on Amazon.” Read more…
Amazon's core values have always been centered on the customer and not necessarily the merchant and this problem with counterfeiting has not caused a shift of any kind. Merchants continue to be disgruntled at what Amazon is not doing to prevent the problem. Even if the company is aware for their angst.
And you, too, could be a victim if Amazon doesn't solve the problem.
Here are three ways in which the dragons will rear their ugly heads and affect you:
1. Fake Reviews
Once the floodgates opened for Chinese manufacturers, the problem of fake reviews got worse.
Sellers who want to game the system buy fake reviews to increase their rankings and there is nothing that you (and it seems Amazon) can do about it. You wake up one day to find that your superbly popular brand has been leapfrogged in the rankings.
That's what happened to Jamie Whaley of BedBand. She used Fakespot to find out what was happening. Fakespot is an independent site that judges the validity of reviews.
You can make use of it to check out any suspicious competitors.
2. Commingled Inventory
Amazon's commingled inventory bundles products together at its Fulfillment Centers. This means a product that is sent by one merchant can actually be sold by another—including you unknowingly.
And it all goes further to show that Amazon hasn't pulled out all the necessary stops to manage the surge of counterfeits.
3. Hijacked Listings
Hijacked listings occur when sellers suddenly see random brand names pop up onto their product page with a similar item being promoted at a much cheaper price. In such an event, a buyer will obviously choose the cheaper product, disregarding yours. And if something goes wrong with the cheap alternative, the bad reviews will all be bundled together with yours.
This is what happened to Judah Bergman and his brand Steeltime.
“The next thing you know you've lost sales plus your good star rating,” said Bergman. “If you want to fight them, you won't have time to do anything else.” Read more…
According to Bergman, trying to fight the dragons will leave you no time to do what you need to do for your business.
And that is why merchants need Amazon to do more to protect the integrity of their platform against those who violate their weak anti-counterfeiting policy. The current policy still makes it too easy for fraudsters to just change names and reopen stores with different monikers but the same inventory.
According to CNBC, the word “counterfeit” appears 30 times in Alibaba's latest annual report. Amazon, on the other hand, has a 2015 annual report that paints a whole different picture. No single mention of counterfeit. Only the last of its two dozen risk factors mentions potential liabilities associated with “fraudulent or unlawful activities of sellers.”
Let's Discuss: Have you ever been affected by counterfeit issues related to Amazon? Share it in the comments.